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Masdar yet to mandate banks for up to USD 1bn green bond, targets international investors – company executive

Abu Dhabi Future Energy Company (Masdar), a UAE-based renewable energy company, is yet to mandate banks for an up to USD 1bn green bond, which could launch before the summer, a company executive told Debtwire.

“The exact timing is still to be determined and is subject to market conditions amongst other things, but certainly before the summer is possible,” said Bruce Johnson, Director of Corporate Finance and Treasury at Masdar.

“We’ve not mandated anyone yet, but we will do so closer to the issuance date,” he said. “In terms of tenor, we’ve not made a final decision.”

Masdar expects to market the upcoming green bond primarily among international investors, as was the case with its debut USD 750m 4.875% 10-year green bond issued in July 2023.

Around 87.5% of that bond was allocated to investors outside of the Gulf, and Johnson anticipated the split between international investors and local investors to be similar in future issuances.

Part of the green bond proceeds will immediately be used to repay a USD 500m bridge loan signed with Abu Dhabi Commercial Bank (ADCB) during COP 28 in December, of which a substantial portion has been used to meet Masdar’s equity funding commitments for capex on new greenfield projects, Johnson said.

The firm regularly raises short-term bridge-to-bond facilities to reduce the cost of carry that would otherwise be incurred by issuing bonds ahead of Masdar’s immediate funding needs, Johnson noted.

In general, Masdar’s green bond proceeds fund equity commitments on projects that have already achieved final investment decisions, rather than development expenditure costs, Johnson said.

Last year’s bond has been fully allocated as of today, towards projects in Uzbekistan and Azerbaijan, and some “closer to home as well”, according to Johnson.

Masdar is set to publish its impact and allocation report for 2023, which is undergoing third party assurance from Ernst & Young and will cover last year’s bond issuance, Johnson continued.

“We hope to publish that before announcing our new bond, because it shows our investors that we have done everything we said we would do in the context of that debut bond, and that we will continue to meet the commitments that we have made under our Green Finance Framework going forward, with all of our issuances in the future,” he said.

Citigroup and First Abu Dhabi Bank acted as global coordinators on the 2023 green bond, whilst BNP Paribas, HSBC, SMBC Nikko, Societe Generale and Standard Chartered acted as joint lead managers and bookrunners.

Beyond funding at the corporate level, Masdar will continue to raise non-recourse financing on its utility-scale projects globally, Johnson said.

The firm has closed several of these projects so far this year, including the Baltic Eagle offshore wind farm in Germany, the 6th Phase of the Mohammed bin Rashid Al Maktoum Solar Park in the UAE and the Bukhara PV and battery storage project in Uzbekistan.

“We expect several more to close in the second half of the year,” Johnson noted.

Masdar is owned by the Abu Dhabi National Energy Company (TAQA), Mubadala Investment Company and Abu Dhabi National Oil Company.